How are/can Investment banks protect themselves against the credit crunch?

Please also provide any online articles or sources you have used to formulate an answer.

Banks normally has to put aside a certain percent of cash for loans that go into default. However many subprime loans was approved which is causing most of the credit crunch issue.
Tighter lending practices will need to be in place to prevent approving loans to under qualifying people.

It seems to me they can't, and thus the reason so many institutions are no longer around. They've made their choices, made their beds, and now they must sleep there. All they can do now is pull in their horns, and restrict activity, which only makes things worse for others. More strict legislative caps are already in place; their hands are tied.

They are completely reliant now on someone else, on some other market, on the psychology of the markets and human emotion.

The lack of confidence over sub-prime loans has caused liquidity to dry up. All liquidity is going into T-Bills. Commercial paper has even dried up.

All of the fears have become very real problems. The tide has gone out in the housing market and will have an effect on everyone鈥檚 wallets eventually.

If you believe the federal funds futures market, the Federal Reserve must change its mind every month or so regarding what it plans to do with interest rates.

They must now but wait.